In California, SucreSource, a wholly owned subsidiary of BlueFire Renewables (BFRE.OB), has signed agreements with GS Caltex, a Korean petroleum company and oil refiner jointly owned by Korean conglomerate GS Group, and Chevron, to build a cellulosic sugar plant in Korea. GS Caltex provides over 50 percent of Korea’s oil needs.

“This agreement validates SucreSource’s business model of selling its cellulosic sugars and, as in this case, sugar producing process to synergistic back end proprietary chemical companies to produce high value products,” said Arnold Klann President & CEO. “As a major petroleum producer, GS Caltex is a perfect partner with which to initiate the business build out. Korea, like the U.S., China, and several other nations, is moving away from food-based sugars to produce high-end products such as biobutanol, ethanol, ethyl levulinate and various other chemicals. SucreSource is a first mover in this space and has the proven technology to meet this increasing cellulosic sugar demand head-on. This facility will be the first of many to be built.”

The facility will process 2 tons of construction and demolition debris per day into cellulosic sugar, which will be converted into a high value chemical by GS Caltex’s proprietary technology. The facility will be owned and operated by GS Caltex with SucreSource providing the process design package, equipment procurement and technical and engineering support. Once the initial facility is validated, SucreSource will work with GS Caltex to develop and build larger commercial scale facilities in Korea and throughout the world.

“Both parties agree that this is the first step towards commercial deployment of cellulosic chemicals in South Korea and, potentially, their trading partners,” said John Cuzens, CTO for BlueFire Renewables.

SucreSource and GS Caltex have already commenced work on the project. SucreSource is actively pursuing other partnership opportunities and hopes to announce more relationships soon.

More about BlueFire

BlueFire Renewables, Inc. was established to deploy a commercially ready, patented and proven Concentrated Acid Hydrolysis Technology Process for the profitable conversion of cellulosic waste materials (“Green Waste”) to renewable fuel sources, including Cellulosic Ethanol, Biodiesel, BioJet Fuel, and Drop-in Directs. BlueFire received an increase to its Grant totaling $88 million under the American Recovery and Reinvestment Act in December of 2009. BlueFire’s biorefineries will be located near markets with high demand for ethanol and will use locally available biomass.

Advanced Biofuels as a system of systems

We see the announcement at BlueFire and GS Caltex as another sign that the industry is heading towards what we described in September as The Third Way.

“Taking fungible, already aggregated crops and using them for industrial biotech may be an efficient way for a company to get into business, but it is fatally flawed for standing up an entire, at-scale industry. Just ask any US ethanol or biodiesel producer how much they loved 2008-09. Or ask “why there is an ethanol shortage in Brazil, and India?”

It is the problem of borrowing Dad’s carwax or Mom’s kitchen to start a kid-owned business in car-washing or selling lemonade by the roadside, and trying to take it to scale. Scale ruins relationships, when a feedstock is shared. It’s a variation on the Tragedy of the Commons.

Well, the Third Way is about providing alternatives through a systematic approach. Companies like Amyris (AMRS), Solazyme (SZYM) and LS9 are moving towards the Third as they begin to develop relationships with companies that are developing dedicated, low-cost, at-scale sources of sugars.

Low Cost Sugars: The Contenders

There are companies like Proterro, Comet Biorefining, HCL Cleantech, Codexis (CDXS), and Renmatix that are avowedly all about low-cost sugars.

Then, there companies like Edeniq, BlueFire or KL Energy that can go all the way to cellulosic ethanol, but also have a particularly strong technology in pre-treatment and saccharification – that it, producing a cellulosic sugar.

The road to low-cost sugars can be divided into four pathways.

The Acid path

HCL Cleantech

The Bottom Line: Closest ties to date are with Coskata, LS9. Likes wood. New CEO Philippe Lavielle is expected to take the company through a major expansion into the US this year.

The latest: In July, the US Department of Energy awarded $9 million dollars to LS9 and its partner HCL Cleantech to improve and demonstrate an integrated process to convert biomass feedstocks into fermentable sugars and then into diesel and other biofuel and biochemical products. As part of the DOE grant, the two companies are combining their proprietary technologies to produce drop-in advanced biofuels and other valuable bio-based chemicals mainly from wood waste and other agriculture waste.

The Bottom Line: Closest ties are with Elkem. Preferred feedstocks are woods and agricultural wastes.

The latest: In October 2010, Weyland commenced production of cellulosic ethanol at its pilot plant in Bergen. The plant, which was formally opened by State Secretary Per Rune Henriksen, has a 200,000 liter (53,000 gallon) annual capacity. The Weyland process is based on concentrated acid hydrolysis with the company’s core technology being a method (patent pending) for recovering acid consumed in the process. Weyland’s can utilize a variety of different feedstocks, such as wood and agricultural waste, and wood waste from demolition

The Enzyme path

The Bottom Line: Closest ties to date are with Raizen (Shell-Cosan) and Chemtex. Likes bagasse. Expected to go through a major expansion in chemicals this year and in 2013, through the Chemtex partnership. Key tie-in with Dyadic (DYAI.PK) gives them massive manufacturing capabilities – Dyadic is also tied in with Abengoa (ABGOY.PK). Fuels await strategic directions from Shell.

The Latest: In California, Codexis announced a 16% year-over-year gain in 2011 revenues to $123.9 million, and a loss of $16.6 million, or $0.46 per share, compared to a loss of $8.5 million in 2010. On a non-GAAP basis, Adjusted EBITDA was $4.3 million for fiscal 2011 compared to $9.9 million for fiscal 2010. Codexis management the drag on earnings represented investment by the company in developing its renewable chemicals business following purchase of technology rights from Maxygen. For 2012, Codexis forecasts revenues in line with or exceeding 2011 results, and a positive EBITDA.

Two key product lines were launched in 2011, CodeXyme cellulase enzymes and CodeXol detergent alcohols. CodeXol is going through the scale-up from pilot and is not expected to reach commercial scale before 2015. CodeXyme is based around unlocking low-cost sugars from, initially, sugarcane bagasse, on the fuels side through its partnership with Raizen, the Shell-Cosan JV, and via an expanded set of feedstocks and focused on renewable chemicals through a partnership with Chemtex – the latter included a projected 25 million gallon facility based in the US. CEO Alan Shaw commented that he expects the company can generate as much as $1 billion in global revenue by 2020 through the commercialization of its enzyme platform.

The latest: This month, Edeniq advised that it is expanding as it plans to launch its new pilot cellulosic ethanol plant after receiving a $25 million grant from the Department of Energy. The plant will produce up to 50,000 gallons/ year and will employ up to sixty people. Feedstocks for the plant will include wood, switchgrass, and corn stover.

Also, the company acquired SmartFlow technology, a Georgia firm, on undisclosed terms.

KL Energy

The Bottom Line: Closest ties are with Petrobras. Preferred feedstocks are corn stover and sugarcane bagasse.

The latest: Last year, KL Energy started testing its cellulosic ethanol production process using Brazilian sugarcane bagasse. Modifications have been made to allow for the physical and chemical differences between bagasse and woody biomass and, most importantly, a new fermentation process has been designed. Ultimately, the plant will switch to a clear mash fermentation process that is used in Brazilian sugarcane mills.

KL recently signed a development agreement with state oil giant Petrobras to bring its technology to Brazil.

The latest: In Ontario, Comet Biorefining announced that it has signed an exclusive agreement with Fulton Engineered Specialities Inc., a leading low cost manufacturer of modular process equipment and systems. Under the agreement, Fulton will provide turn‐key manufacture of Comet’s modular cellulosic sugar process systems on an exclusive basis. Fulton Engineered Specialties is a designer and fabricator of custom pressure equipment and skid mounted, designed, fabricated and tested chemical process systems.

Comet Biorefining has demonstrated its cellulosic sugar technology at pilot scale and is currently scaling up to commercial applications. Comet Biorefining’s goal is to license its Cellulosic Sugar Technology worldwide

Comet CEO Andrew Richard said, “The key to success for the biofuels and bioproducts industry is low cost sugar. A significant component of low cost sugar is low capital cost. Fulton is a world leader in low cost, custom equipment manufacture, with operations in several countries.”

The Bottom Line: Agrivida’s technology triggers enzymes inserted into plants, that begin to rapidly breakdown of cellulose, to produce lower-cost sugars which can be fermented into biofuels and renewable chemicals. Closest ties are with Syngenta to date.

The latest: Agrivida plans to deliver three enzymes to bring down the cost associated with corn-based ethanol to $0.80 per gallon. After receiving $6.8 million in grants from the USDA and the Department of Energy’s ARPA-E program earlier this year, Agrivida plans to deliver these three enzymes for corn this fall.

“We are expressing all the cell wall degrading systems in the plant,” explains Agrivida CEO Michael Raab, “as the core part of our technology. We can control the activity of those enzymes so that in the plant we can express all the enzymes in dormant form. After harvest, we activate the enzymes in the material, so you don’t have to pretreat in the same way. It makes the process lower temperature, with a moderate PH, and takes out a lot of capital costs and those high costs of dilute acid pretreatment. Also, we really reduce the enzyme loading.”

The hydrolysis path

Sweetwater Energy

Through 2010, Sweetwater scientists concentrated on developing a new cellulosic sugar extraction technology, while the engineering team built a pilot facility to extract and sell sugar from corn silagea type of whole-corn storage technology that is currently used predominantly to feed cattle. The pilot facility manufactured sugar through late 2010 and early 2011. The sugar was sold to two companies working with the Department of Defense in an effort to make bio-based jet fuel.

In the spring of 2011, with the experience gained from running the pilot facility and the advances Dr. Parekh made in the laboratory, Sweetwater laid out the plans for its first demonstration cellulosic plant, which will be completed in summer of 2012. More on Sweetwater, here.

The Supercritical path

In supercritical, biomass is split into cellulose and sugar in supercritical water at high temperature and pressure in a two-step process.

Renmatix

The Bottom Line: Closest ties are with Amyris and BASF (Amyris CEO John Melo is a member of the Renmatix board). Favorite feedstock is wood.

The latest: The world’s leading chemical company, BASF, invested $30 million out of a $50 million investment round announced in January by Renmatix. “The Plantrose technology could allow us in the future to broaden our use of renewable raw materials while improving the cost effectiveness of our value chains even further. In the partnership with Renmatix, BASF is pursuing a new direction while simultaneously underlining its corporate strategy of offering even m
ore sustainable solutions,” said Dr. Josef R. Wünsch, Senior Vice President Modelling, Formulation Research and Technology Incubation at BASF.

Also, Renmatix announced last week that former Pennsylvania governor Mark S. Schweiker joined the company as Senior Vice President (SVP) and Chief Relationship Officer.

The Biosynthetic path

Proterro

The Bottom Line: Closest ties are with Solazyme. Very early stage, still.

The latest: The company is developing its solid-phase delivery system, at last report still on a bench-scale system.

Proterro’s biosynthetic process combines an engineered photosynthetic microorganism with a modular, solid-phase bioreactor to provide a fermentation-ready feedstock, called Protose. Produced by combining only water, carbon dioxide, sunlight and nutrients in the biosynthetic process, Protose is projected to cost less than such feedstocks as sugar cane and cellulosics, and can be used to produce a variety of commercial scale fuels and chemicals through standard industrial fermentation methods.